On September 30, 2010, the Internal Revenue Service took a
step toward their goal for increased oversight of the paid tax return preparer
industry when they published final regulations under section 6109. At first, these final regulations were
applied with a very broad brush that included the retirement plan industry and
included the definition of tax return preparer as an individual who prepares
for compensation, or assists in preparing all, or substantially all, of a tax
return or claim for refund of tax.

All tax return preparers would have to obtain a preparer tax
identification number (PTIN). Obtaining
the PTIN would mean fees totaling $64.25 per individual. Keeping the PTIN would mean passing a competency
exam written for those preparing 1040 returns and continuing education requirements. For some TPA firms, these costs could be
substantial.

The IRS received many comments as to the financial burden
placed on TPA firms due to the requirements.
It was also pointed out that the competency exam and the continuing
education requirements placed unreasonable demands on those in the retirement
plan industry as they will cover information not used in tax return preparation
by TPA firms.

Fortunately, reason prevailed and an exception for the fees,
competency exam and continuing education was granted for anyone who does not
prepare any individual tax returns (such as 1040 returns), but does prepare any
of the returns listed in the New Requirements for Tax Return Preparers:
Frequently Asked Questions. The following
returns commonly used by the retirement plan industry are included in the
exception list:

Form SS-4, Application for Employer
Identification Number;Form 1099 series;Form 2848, Power of Attorney
and Declaration of Representative;Form 4419, Application for Filing
Information Returns Electronically;Form 5300, Application for
Determination for Employee Benefit Plan; Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans;Form 5310, Application for
Determination for Terminating Plans; Form 5500 Series; Form 8717, User Fee for Employee Plan Determination, Opinion, and Advisory
Letter Request; and Form 8821, Tax Information Authorization.

The IRS recently added Q & A 9 in the Scenarios section
of the New Requirements for Tax Return Preparers: Frequently Asked Questions, which effectively
added the following forms to the list:

Individuals preparing the listed forms are still required to
obtain a PTIN but will not be required to pay the registration fees or meet the
competency exam and continuing education requirements. PTIN applications can be made online, or on
a Form W-12, IRS Paid Preparer Tax Identification Number (PTIN)
Application. The online applicant will,
of course, receive a PTIN much quicker than the applicant who files the Form
W-12, which can take weeks. Each
individual must have their own email address to receive a PTIN, so a firm email
address can not be used for all employees.

Since the exceptions were issued in January, it is possible
that many practitioners obtained their PTINs between 9/30/2010 and 12/31/10, or
may have obtained PTINs that they no longer need, and paid a fee. Now that they are no longer required to pay
the fee, they may a request a refund, and they may cancel a PTIN, by sending a
signed, written explanation to:

The IRS adds to the New Requirements for Tax Return
Preparers: Frequently Asked Questions,
so it is a good idea to read through those if you have any questions about your
scenario, any new forms added to the exception list or difficulties with the
application process. The FAQs are easy
to access by going to www.irs.gov and
clicking on Tax Professionals. PTIN
requirements are shown under Tax Professionals Topics on the left.

Before celebrating too much over the exception, you should notice
that Form 945, Annual Return of Withheld Federal Income Tax and Form 5330,
Return of Excise Taxes Related to Employee Benefit Plans, are not included on the
above list. Therefore, if you are
preparing these forms, you are required to meet all the requirements for the
PTIN. Also, remember it is the intention
of the IRS to include the retirement plan industry in its oversight under
section 6109, so the exception is not considered to be permanent.

About Kristina KananenKristina Kananen started in the retirement plan industry in December 1974 and until March 2000 designed, installed, administeres and terminated defined contribution and defined benefit plans when she joined DATAIR Employee Benefit Systems, Inc.. In her current position, she is primarily responsible for the DATAIR Pension Reporter program for government forms and assists clients in using the program as well as helping them stay current with filing requirements. She serves on the NIPA Designation Committee for APA Course 1.

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